Last week, Zoopla’s executive director Richard Donnell said lenders need to innovate to stay ahead by implementing new ideas such as property risk scores.

Donnell explained that knowing a property’s risk score could tell lenders if it is a liquid asset and indicate if it has any features that might impact pricing in the future. He suggested a score could also accelerate the identification of complicated property issues that often remain hidden until the conveyancing stage.

Commenting on this, Newcastle Building Society national account manager Michelle Ash says: “I’m not convinced by this one.”

“It’s so complicated when you have home improvements. You could have home improvements that could affect the energy performance certificate (EPC) rating, and therefore, it could be more appealing when sold.”

“But after a certain period, that could quickly become outdated. It’s also about who’s responsible for updating this, does it have to be every time you sell? I’m not convinced about this idea,” Ash adds. 

However, Ash explains that it “links nicely to the green agenda and could be a solution, but I don’t think we’re there yet.”

Zoopla’s Donnell says the additional information could inform lending decisions, assist with growth strategies, and even pave the way to risk-based pricing.

Aspen Bridging head of sales Ian Miller-Hawes explains that in bridging “everything is based on risks, so we have to take a close eye on what we’re lending on and whether the yields will work”. 

“It’s also about the refinance elements […] so having additional tools to help us underwrite even quicker is invaluable.”

“For instance, if you’re buying a property with a low EPC rating, we will be lending money to help refurb that and improve that rating. Having those risk indicators will help us get the right values attributed to the property and make the process a lot slicker.”

Meanwhile, Penny House founder Sofia Jones says lenders need to look at other ways to innovate and keep lending and mortgages more affordable. 

As the industry settles into the new interest rate environment, Jones says: “Everybody across the country is feeling it in one way or another and there are other ways that lenders could help clients in terms of looking at interest-only criteria and making that less strict.”

“It’s not the kind of normal advice and it’s not the advice that we’ve been giving over the last however many years because the idea is to pay the mortgage off as soon as you can to pay less interest.”

“But for people that are moving out of interest rates that are 1% to 2% and they’re going on to 4% or 5% for the foreseeable then we need to do something to make sure that those mortgages are affordable.” 

Also commenting, Landbay head of sales Ian Hall says, “in principle, I completely agree”.

“I think as a BTL-only lender, we do take this on board already. What is key to this is the higher risk score for a property is probably a landlord’s dream with regard to the increased yield. For example, for commercial, the property risk score would probably be lower, but the yield is probably going to be higher.”

However, Hall says the people that need to “get on board with this” are the valuers. 

“One thing that does disappoint me in the valuation market is that we don’t see a difference in valuation between a property that might be an A to C. I think the one that has a higher EPC rating should be more valuable.”

Ladder & Sammon Mortgages founder and chief executive Vince Sammon says: “I’m partially there with this.”

“The valuations consistency is key. At the moment, we often see two valuers go out to the same property with different opinions on the value and even suitability in some cases. 

“If there was a property passport to alleviate some of that, it would be great, but refurbishments and improvements would need to be factored in, and I think EPCs would need to form part of this as well.”

“Anything that can speed up the valuation process is a positive idea,” he adds.